Hospitals all over India have seen severe shortage of Oxygen supply in recent months due to big surge in Covid Cases requiring oxygen therapy. There is sudden interest among hospitals for investing in an Oxygen Generator Plant so as to ensure steady supply of life-saving oxygen at reasonable costs. How much does Medical Oxygen Generator Plant Cost? Is it more effective as compared to Oxygen cylinders or LMO (Liquid Medical Oxygen)?

Oxygen Generator technology is not new. It has been in the market for more than two decades. Why the sudden interests? There are two main reasons:

1. We have never before seen such huge volatility in oxygen cylinder prices or worse… shortage / crisis/ lack of supply of cylinders to such an extent that dozens of patients died gasping for breath in ICUs. No one wants a repeat of such incidents.
2. Small & medium hospitals do not have resources to invest upfront so heavily in generators. They preferred to keep it as a variable cost and pass it on to patients.

But now the Government is encouraging setting up captive oxygen generator plants in hospitals by beefing up its Emergency Credit Line Guarantee Scheme (with 100% guarantee)

Is spending on Oxygen Generator a good idea? What is the upfront cost? What is the payback period/ Return on investment (ROI) on oxygen generator? How does cost of oxygen concentrator compare with cost of oxygen cylinders or LMO (Liquid Medical Oxygen) tanks?

Let us look at answers to all these questions in this article.

1. Upfront cost of Medical Oxygen Generator

There are Oxygen Generators ranging from 10Nm3 to 200Nm3 capacity. This is roughly equivalent to 30-700 (Type D cylinders (46.7litres)) per day. The investment required in these Oxygen Generators could vary from Rs 40 – Rs 350 lakhs (plus taxes) based on the capacity required.

2. Space requirement for Medical Oxygen Plant

If the hospital is currently using cylinders, you will not need any more additional space to set-up the oxygen generator than the space required for storing and handling the cylinders. In fact the generator could be more compact and there is no requirement for moving anything around once set-up and connected to the medical gas manifold. Additionally, the hospital will not only be saving on the manpower required for handling cylinders, but also on approximately 10% of the oxygen cost which goes as ‘change-over loss’.

3. Operating cost of Medical Oxygen Generator

The operating cost of oxygen generator consists mainly of two components –

1. Electricity charges
2. Annual Maintenance Cost

Refer to the technical specifications provided by the manufacturer for the electricity consumption. A Comprehensive Maintenance Contract (CMC) could cost roughly 10% of the cost of the equipment.

4. Medical Oxygen Generator – Payback period & Yearly savings

The Return of Investment (ROI) on Oxygen Generators is excellent. On full capacity utilization the entire cost can be recovered within a year. Even at 50% capacity utilization or less, cost of investment can be recovered within 2 years or so.

The overall operating cost could be just 1/3^rd of what it would be if using cylinders and hence the savings on operating cost could be as much as 60-65%. This is big savings.

5. Medical Oxygen Cylinders Vs Oxygen Generator Plant – A comparison

Conclusion

Should you invest in oxygen generators for your hospital? Certainly. Please consider the various schemes by the government to fund the upfront investment involved and prepare to be self-reliant for the medical oxygen needs of your hospital going forward.

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